SUMMARY

General Income Tax

Income tax law in Indonesia:

 Based on the Law of Republic of Indonesia number 7 of 1983 which was lastly amended
by Law number 36 of 2008
 Regulates income tax imposition on Taxable persons in relation to income received or
accrued in a taxable year
 Taxable person will be subject to tax if that person receives or accrues income. Usually
also known as a taxpayer
 A taxpayer is taxed on the income received or accrued during a taxable year or a fraction
of a taxable year

Taxable person

Consist of:

 Individual
 Undivided inheritance
 Entity
 Permanent establishment (BUT)

Taxable person comprises of resident and non-resident taxpayer

a. Resident Taxpayer
Resident taxpayer means:
 An individual that resides in Indonesia or is present in Indonesia for more than
183 days within any 12 month period
 An entity established or domiciled in Indonesia
 An undivided inheritance as a unit in lieu of the beneficiaries
b. Non-resident Taxpayer
Non-resident taxpayer means:
  An individual that doesn’t reside in Indonesia or present in Indonesia for not more
than 183 days within any 12 month period
 An entity don’t established or domiciled in Indonesia

A resident taxable person constitutes a taxpayer if he derives income that exceeds

personal exemption or non-taxable income (PTKP). While a non-resident taxable person
promptly constitutes a taxpayer due to the income derived from sources in Indonesia.

The difference between resident and non-resident taxpayer are:

a. A resident taxpayer is taxed on his income derived from Indonesia and abroad.
A non-resident taxpayer is taxed only on the income originating from sources in
Indonesia.
b. A resident taxpayer is taxed based on the net income with a general rate (Article 17 of
Income Tax).
A non-resident taxpayer is taxed based on the gross income with an appropriate rate
(Article 26 of Income Tax).
c. A resident taxpayer is obliged to submit an annual tax return as a means to assess his
tax obligation in a taxable year.
A non-resident taxpayer is not obliged to submit annual tax return because his tax
obligation are fulfilled through withholding tax, which is final is nature.

Non-taxable person

It include:

 A diplomatic mission
 The officials of diplomatic and consular mission or other foreign official
 International organizations
 The official of the international organization

Taxable object

Taxable object is income that defined as any increase in economic capability received or accrued
by a taxpayer, originating from Indonesia, in whatever name or form.
Taxable object include:

a. Compensation or other remuneration received or accrued in respect of employment

b. Lottery prizes or gifts
c. Business profit
d. Gains from the sale or transfer of property
e. Gains from the transfer of property in the form of grant, aid or even donation
f. Refunds of tax payments already deducted as expenses
g. Interest including premium, discounts and compensation for loan repayment guarantees
h. Dividends
i. Royalties
j. Rents and other income from the use of property
k. Annuities
l. Gains from discharge of indebtedness
m. Gains from foreign exchange
n. Gains from revaluation of assets
o. Insurance premiums
p. Contribution received or accrued by an association
q. An increase in net wealth from income which has not been taxed
r. Income maintained by businesses which are based on Syari’ah
s. Interest
t. Surplus of Bank Indonesia